YouTube and the Music Value Gap

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Canadian musician, songwriter, boutique record label owner and music festival organizer  Miranda Mulholland made quite a splash with her cri de coeur address to the Economic Club of Canada in late May about the challenges facing performers in today’s digital world. Kate Taylor, entertainment columnist for the Globe and Mail who moderated the Economic Club event, in her article “What happens when we starve our artists”, strongly sympathized with Mulholland’s argument that musicians are being shortchanged by the digital distribution model. Mulholland took particular aim at YouTube;

“Let’s look at the biggest music service in the world – YouTube. Did you know that 82% of YouTube users use it for music?  It is supported by advertising and it is based on user uploaded content. But wait. Running a commercial site based on unauthorized uploading of copyrighted music is illegal, right?

YouTube says, it isn’t our fault – we are just the shop window. We didn’t put the items in the window, so we are not accountable for them. We are a passive intermediary. We are not liable for this massive copyright infringement.

But – once again – wait. A top brass at Google just bragged that “80% of all watch time is recommended by YouTube.”  He explained that “Everybody thinks that all the music that’s being listened to and watched is by search.”  But it isn’t, and in his words, “that’s a really important and powerful thing.”

This means that YouTube actively directs consumers. This doesn’t seem all that passive to me. Zero accountability.”

If you want to listen to or watch her full address, it is available here, ironically on YouTube, or you can read the text on Mulholland’s site.

Her comments were picked up and amplified by the blog Artists Rights Watch, and by prominent blogger David Newhoff’s The Illusion of More in a post entitled “Can We Ever End Legalized Piracy?”, which discusses how the DMCA safe harbor regime in the US is not working. While it indemnifies service providers from copyright infringement provided that they respond to takedown notices submitted by rights-holders, the exponential growth of content on the internet has resulted in a virtually free ride for the big platforms who have massively monetized the content available on their sites without too much regard as to its provenance or legality.

Even Canada’s arch copyright sceptic Michael Geist provided a quasi-complimentary account of Mulholland’s address before launching into his usual attack on the music industry and defence of the status quo with respect to the existing safe harbour regime. Should the current regime be ended as Mulholland suggests, we are told by Geist that this would,

“instantly result in the removal of a massive amount of legitimate content, increase surveillance or filtering of website activity, create a huge burden on new, innovative companies, and curtail freedom of expression”.

Whew. The world as we know it would come to an end. Threatened, according to Geist, would be our ability to watch a clip of President Trump in Europe, sports clips from the NHL, a video of memorial events in Manchester (referring to the terrorist atrocity that took place there) or a video from a concert. We are told that YouTube would filter the content, and each of the above examples would trigger a warning of potential infringement and be blocked. This is the usual hyperbole that suggests that any questioning of the existing safe harbour regime for intermediaries, a regime which originated in the US with the DMCA but which has subsequently been applied in Canada and many other jurisdictions, would bring the internet to its knees. Surely there is a Twenty-First Century update to the decades old safe harbour regime that would  provide a neutral platform for content and allow for monetizing it (after all,  why should the intermediaries do this for no return?)–while avoiding what is happening now with the tech companies making massive profits off the labour of creators, most of whom are struggling financially. This dichotomy is rightly called by many the “value gap”.

Vick Bain, CEO of the British Academy of Songwriters, Composers and Authors (BASCA) has decried the value gap and has written that there are less than 2000 people in the UK who are earning above the average national salary of around GBP27,000 from their performance royalties (0.0003% of the population). She points out that ad supported services like YouTube retain almost half of all ad revenues, with songwriters and composers negotiating for scraps at the bottom of the food chain. In an earlier blog I also outlined some of the features of the “value gap” in Canada, where Music Canada’s President, Graham Henderson, estimated that over the past 18 years, music revenues in Canada fell by 80% compared to what they would have been had they kept pace with inflation and real GDP growth.

Geist refuses to accept the premise of a value gap in the music industry. He points to the fact that SOCAN, the Society of Composers, Authors and Music Publishers of Canada, reported that its revenues grew again in 2016, up by eight percent. He also cites the 2017 Global Music Report from IFPI (International Federation for the Phonographic Industry) stating that Canada is now the sixth largest recorded music market globally. While these are positive signs, they fail to address the issue that music revenues have not kept pace with growing music consumption. That same IFPI press release, moreover, also noted that,

“Subscription audio streaming generated the majority of all streaming revenues in 2016 at USD $94.45 million, compared to USD $15.72 million from ad-supported audio streaming and USD $17.59 million from video streams”.

This puts the finger on the source of much of the problem. Subscription streaming services are generating reasonable returns to the music industry (although the industry still sees music as being valued too low by some online music services); it is the ad-supported services like YouTube, which drive much of their business through curated music, that are getting a free ride.

YouTube is after all part of the Google empire, run by a corporation that would rather ask for forgiveness after (if they have to) rather than permission beforehand. Whether it is deciding to digitize books without the copyright holders’ permission, putting up large excerpts of those books on the internet (again without permission), scooping up content without authorization or payment to feed its AI projects or even the famous Streetscape project, Google has shown that its sensitivity to concerns of copyright ownership and privacy come very much second to its own commercial ambitions.

Will there be any change? YouTube’s tone-deaf response to complaints about ads being inserted beside videos promoting hate speech, white supremacy and radical Islamic terrorism suddenly changed when advertisers began to flex their muscles. Money talks. Musicians like Miranda Mulholland don’t have anything like the same clout, but by publicly calling out the internet intermediaries like YouTube that are massively profiting off the backs of creators through both legal and infringing content, they can effect change. Policy-makers are looking at the digital balance. The free ride that YouTube is getting by virtue of a safe harbour that it does relatively little to earn allows it to compete on a playing field tilted in its favour with the subscription streaming services that generally pay reasonable returns to content creators. It can float on a sea of infringing content where takedown is slow and stay-down non-existent, generate huge profits and in the process flow back miserly amounts to creators.

Things won’t change overnight. The safe harbour concept is unlikely to be dismantled, but it could be tweaked to force the big tech intermediaries to play a more active role in respecting copyright, which might in the end result in a fairer economic shake for creators. Don’t hold your breath, but at least courageous (and frustrated) artists like Miranda Mulholland are speaking out.

© Hugh Stephens, 2017. All Rights Reserved.

Author: hughstephensblog

I am a former Canadian foreign service officer and a retired executive with Time Warner. In both capacities I worked for many years in Asia. I have been writing this copyright blog since 2016, and recently published a book "In Defence of Copyright" to raise awareness of the importance of good copyright protection in Canada and globally. It is written from and for the layman's perspective (not a legal text or scholarly work), illustrated with some of the unusual copyright stories drawn from the blog. Available on Amazon and local book stores.

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